“We estimate we will incur total pre-tax exit and disposal costs of $US10 ($A10.6) million to $13 million, with the majority of these costs occurring in second half 2014,” the Illinois-based company said.
The company went on to say that actual costs relating to these actions would not be known until the disposal plan had been finalised. Suncoke had both solicited and received offers for its coal mining business.
“In view of these offers, the continuing weakness in coal pricing and our analysis of the recoverability of our long-lived assets and goodwill, we recorded a non-cash pre-tax impairment charge of $103.1 million in the second quarter of 2014.”
In March SunCoke said it would, over time, drop down its entire domestic coke business to SunCoke Energy Partners. As a part of the multi-year plan SunCoke Energy’s board approved the initial drop down of a 33% interest in the Haverhill and Middletown cokemaking operations.
Also in March, SunCoke Energy’s chairman and CEO Fritz Henderson said the expiration of certain provisions in the company’s tax sharing agreement with Sunoco had given it greater flexibility to evolve its structure and unlock value for shareholders.
“The first step is to begin executing a plan to drop down our entire domestic cokemaking business to SunCoke Energy over the next few years,” he said.
“We believe this strategy will create value for shareholders directly through the proceeds received for the assets dropped down and indirectly through the increase in value of our SunCoke Energy ownership interest and higher total cash distributions paid to us, including incentive distribution rights,” Henderson said.
SunCoke Energy meanwhile announced it expected to produce just more than 1 million short tons of coke in the second quarter of 2014.
That is up 115,000t from the first quarter of 2014, which was impacted by severe winter weather.
Year-on-year, however, production was down an estimated 22,000t. That was due to lower production at the company’s Haverhill and Indiana Harbor cokemaking facilities.
Lower coal to coke yields at Haverhill and reduced production at Indiana Harbor contributed to estimated production declines of 19,000t and 12,000t respectively.
This decrease was partly offset by higher production at SunCoke Energy’s Granite City and Jewell Coke operations.
